U.S. drillers cut rigs for 14th week in a row -Baker Hughes

Reuters Staff

3 Min Read

March 24 (Reuters) - U.S. energy firms this week cut oil and
natural gas rigs for a 14th week in a row to the lowest level
since at least 1940, data showed on Thursday, as energy firms
continue to slash spending as part of the deepest energy price
rout in a generation.
Oil rigs alone fell 15 to 372, the lowest level since
November 2009, oil services company Baker Hughes Inc
said in its closely followed report.
Looking forward however, analysts forecast the rig count
will bottom in a couple months before recovering later this year
when they expect energy prices to rise.
Drillers cut 12 oil and gas rigs in the week to March 24,
bringing the total rig count down to 464, the report said.
That compares with 1,048 oil and gas rigs operating in the
same week a year ago. In 2015, drillers cut on average 22 oil
and gas rigs per week for a total of 1,142 for the year, the
biggest annual decline since at least 1988.
Before this week, drillers cut on average 20 oil and gas
rigs per week for a total of 222 so far this year.
Energy firms have sharply reduced oil and gas drilling since
the selloff in global crude markets began in mid-2014.
Still, many analysts think the combined rig count will rise
later this year with signs that prices have bottomed after U.S.
crude futures hit a 12-year low of $26 a barrel in
February and U.S. gas futures fell to a near 18-year low
of $1.611 per million British thermal units earlier in March.
Since hitting those lows, U.S. oil futures have soared over
50 percent to around $39 a barrel, while U.S. gas gained more
than 10 percent to around $1.80 per mmBtu.
U.S. crude futures were fetching near $42 a barrel for the
balance of 2016 and almost $45 for calendar 2017
.
"Based on indications from exploration and production,
activity can begin to increase at the $45 level. E&Ps are
hedging when the 2017 strip is at or above $45," analysts at
Cowen & Co, a financial services firm, said in a note this week.
With the increase in forward U.S. crude prices over the past
month or so, E&P firms like Pioneer Natural Resources Co
and Cimarex Energy Co have recently told analysts they
were looking to boost hedging programs.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)